How to Sell an Apartment with Unpaid Service Charges or a Special Assessment

Prepared by the NovAsia Editorial Team

Arrears owed to a condominium management body do not always make a sale impossible. They do, however, turn an ordinary resale into a transaction involving an additional creditor, a potentially disputed balance, and a high degree of dependence on the building’s administration.

Even where legal title remains with the seller, management may control access cards, parking records, move-in and move-out procedures, utility reconciliations, internal account information, and staff cooperation during handover.

The most damaging strategy is to conceal the arrears until the buyer discovers them during due diligence. At that point, the buyer is no longer looking at one unpaid invoice. New questions appear:

• Are there other undisclosed debts?
• Why was the unit not being monitored properly?
• Can management restrict access or handover?
• Could the title transfer be delayed?
• Is another special assessment about to be issued?
• Who is responsible for penalties?
• Can the seller’s net proceeds and representations be trusted?

The correct objective is to turn the arrears into a controlled line item in the completion statement:

confirmed balance → legal and contractual allocation → source of payment → receipt → clearance letter → final reconciliation

Where charges are disputed, add another sequence:

payment of the undisputed amount → written objection → holdback or agreed resolution → release conditions

Identify every category of amount owed

The phrase “service-charge debt” often hides several different liabilities.

Regular service charges

Monthly, quarterly, or annual contributions toward the common operating costs of the building.

Late-payment penalties

Amounts charged under the house rules, management agreement, or valid resolutions of co-owners.

Reserve-fund contributions

Regular payments intended for future major repairs, if the condominium has established such a fund.

Special assessments

One-off or staged contributions for capital works, an operating deficit, emergency expenditure, or another exceptional purpose.

Utilities

These may include:

• electricity;
• water;
• common utility charges;
• generator charges;
• waste collection;
• shared communications systems.

Parking and access items

• parking fees;
• remote controls or access cards;
• vehicle stickers;
• storage units;
• replacement access devices.

Renovation or moving deposits

These may be refundable, partly applied, or disputed.

Damage charges or fines

Examples include:

• damage to common property;
• unauthorized renovation;
• prohibited short-term leasing;
• breaches of pet or noise rules;
• damage during a move.

Debt to a private unit manager

A private property manager may be owed separate sums for leasing, repairs, cleaning, or management of the individual unit. That debt is not automatically the same as an amount owed to the condominium.

Never accept one unexplained total.

Obtain a dated unit-account statement

Ask the authorized management entity for a statement showing:

• the owner’s name;
• project, tower, and unit number;
• issue date;
• the date through which the account has been calculated;
• opening balance;
• invoices issued;
• payments received;
• credits and refunds;
• penalties;
• disputed items;
• current service charges;
• special assessments;
• utilities;
• deposits;
• total amount due;
• the name, signature, and contact details of an authorized person.

Confirm whether the statement covers:

• building management;
• parking;
• utility accounts;
• developer-side charges;
• reserve-fund contributions;
• special assessments.

In some projects, different entities collect different payments. A zero balance with a private rental manager does not prove that the condominium account is clear.

For the transaction file, use a clear name such as:

2026-07-19_unit-A1203_preliminary-account-statement.pdf

Update it again shortly before completion.

Verify who is actually entitled to collect

The seller should confirm:

• the management entity’s legal name;
• its authority under the internal rules or appointment documents;
• official bank details;
• the relevant invoice;
• the receipt procedure;
• a contact for independent verification;
• any transfer of responsibility from the developer to an owners’ body or new manager.

Do not send a large payment to an employee’s personal account based only on a chat message.

Where management has changed, reconcile:

• the closing balance under the former manager;
• the effective transfer date;
• the opening balance under the new manager;
• the transfer of collection rights;
• payment history.

The buyer should not inherit a dispute between former and current management.

Review the building rules and source documents

Sub-Decree No. 126 provides the general framework for co-owned buildings, private units, common property, and internal governance in Cambodia. The validity and calculation of a specific charge still depend on the project documents, internal rules, management arrangements, and properly adopted resolutions.

Collect:

• the internal regulations;
• the service-charge schedule;
• co-owner resolutions;
• the special-assessment notice;
• the relevant budget;
• payment rules;
• penalty provisions;
• the objection procedure;
• the cost-allocation method;
• the effective date of the resolution.

Do not import condominium rules from another country and assume they apply in Cambodia.

Ask:

• Is the service charge calculated by registered private area, contractual sale area, or a fixed amount per unit?
• Was a co-owner resolution required?
• Did the developer adopt the decision while still controlling most units?
• When did the amount become due?
• Can it be paid in installments?
• How are penalties calculated?
• How should charges be allocated between seller and buyer?
• Does the developer pay for unsold units?
• Who has legal authority to collect?

A charge may be reasonable in principle but incorrectly calculated for the specific apartment. Review both the legal basis and the arithmetic.

Reconcile the unit area

Service charges may be based on:

• registered private area;
• the sale area in the original developer contract;
• an internal condominium schedule;
• unit type;
• parking allocation;
• a fixed unit rate.

Compare the area used on the invoice with:

• the certificate of ownership;
• the original sale and purchase agreement;
• the condominium’s unit schedule.

If management charges on 82 square meters while the title records 68 square meters, request a written explanation.

Do not stop all payments where only the area difference is disputed. Calculate and pay the undisputed portion unless legal advice indicates otherwise.

Reconstruct the payment history

Create a table:

Compare:

• the seller’s bank statements;
• management receipts;
• online account records;
• documents from the previous manager;
• payments made by the tenant;
• statements from the private unit manager.

Common problems include:

• the owner paid an intermediary who never remitted the money;
• the payment was allocated to the wrong unit;
• a cash receipt was lost;
• the tenant paid utilities but not service charges;
• a developer-promised waiver was never applied;
• penalties were charged twice.

If an intermediary failed to transfer funds, the condominium may still pursue the registered owner. The seller can preserve a separate claim against the intermediary after clearing the unit account.

Do not force the buyer to wait for that separate dispute where the arrears can be settled at completion.

Preliminary and final clearances

Different stages require different documents.

Before marketing

Obtain the current balance and identify any disputed item.

Before accepting a reservation deposit

Disclose the approximate amount and the proposed method of settlement.

During due diligence

Provide the detailed statement and source documents.

Five to ten working days before completion

Request an updated payoff figure, official payment instructions, and the required clearance-letter format.

At handover

Record final meter readings, utility charges, and access devices.

A statement issued three months earlier does not confirm that no new charges have arisen.

Can management legally block the title transfer?

There is no universal answer for every building and every transaction.

The position must be checked against:

• land and cadastral registration requirements;
• co-owner obligations;
• the building’s internal procedures;
• the practice of the competent registration office;
• the conditions of the sale agreement.

Management may say, “The transfer cannot proceed without our clearance.” The buyer’s lawyer should determine whether this is:

• a formal registration requirement;
• an internal building requirement;
• a contractual condition of completion;
• a practical issue affecting access and handover;
• an attempt to exert pressure without authority to stop registration.

Even where title could technically be transferred without management clearance, a prudent buyer may refuse to complete until the account is resolved. The operational risk remains.

A seller is usually better served by solving the financial issue than by relying on a technical loophole.

Three practical payment structures

1. The seller pays before completion

This is suitable where:

• the amount is agreed;
• the seller has available funds;
• management issues clearance promptly;
• there is no cash shortfall caused by a mortgage.

Procedure:

1. Obtain the final payoff statement.
2. Verify the bank details.
3. Pay the amount.
4. Obtain a receipt.
5. Obtain the clearance letter.
6. Add both to the buyer’s due-diligence file.

This is the cleanest structure.

The sale could still fail after payment, but the arrears remained the seller’s liability in any event.

2. Direct payment from the purchase price

The buyer, lawyer, bank, or agreed settlement party pays part of the purchase price directly to management.

The completion statement should show:

• gross purchase price;
• credit for any deposit already paid;
• direct payment to management;
• balance due to the seller.

Advantages:

• the seller does not need to fund the arrears in advance;
• the buyer can see that the debt is actually paid;
• the payment can occur simultaneously with completion.

Required protections include:

• an irrevocable written payment instruction;
• an exact amount;
• verified bank details;
• receipt;
• clearance letter;
• protection against the amount being deducted twice.

3. A limited holdback

Part of the price is retained temporarily until a final bill is available or a dispute is resolved.

This may be suitable where:

• the final utility bill has not been issued;
• a special assessment is disputed;
• the clearance letter is delayed;
• management’s calculation remains uncertain.

The holdback agreement should define:

• the amount;
• who holds it;
• the release condition;
• the long-stop date;
• the dispute procedure;
• return of any excess;
• authority to make payment;
• costs and bank fees.

Do not describe an ordinary agent’s account as a protected escrow or stakeholder account unless it is legally structured and operated as one.

Draft direct-payment instructions carefully

A written instruction can state in substance:

The buyer’s payment of X to [management entity] will be credited against the purchase price and will discharge the buyer’s obligation to the seller to that extent.

Identify:

• the apartment;
• the invoice;
• the payoff date;
• the payer;
• the recipient;
• bank details;
• receipt requirements;
• what happens if the actual balance differs.

If the final balance is lower, the surplus should be released to the seller.

If it is higher, the seller should fund the difference or the agreed holdback should cover it.

Never change payment instructions based on one message in a chat app. Confirm new details through a known official contact and a formal invoice.

Disputed arrears

A disputed amount is not the same as no liability.

Create a separate dispute file containing:

• the invoice;
• the seller’s objection;
• the relevant internal rule;
• prior receipts;
• management’s response;
• the resolution or meeting record;
• calculations;
• legal advice where required;
• any settlement proposal.

Separate:

Undisputed amount

from:

Disputed amount

Unless advised otherwise, pay the undisputed portion. This limits penalties and demonstrates good faith.

For the disputed portion, consider:

• payment under written reservation of rights;
• a holdback;
• an agreed reduction;
• mediation, arbitration, or court proceedings;
• continued seller liability after completion with adequate security;
• transfer of the dispute to the buyer in exchange for a precisely quantified credit and full disclosure.

Most buyers will not accept a seller’s historical dispute without a discount and clear protection.

Payment under reservation

A seller may decide to pay in order to obtain clearance while preserving a right to seek repayment.

The written notice should identify:

• that payment does not constitute admission of liability;
• the amount disputed;
• the rights being reserved;
• the requirement for a receipt;
• the intended next step.

Whether this wording preserves all rights should be confirmed by Cambodian counsel.

Commercially, it may still be cheaper to pay a disputed amount than to lose a buyer.

Compare:

the disputed amount

with:

likely price reduction + delay + commission + holding costs

Special assessments

A special assessment needs separate analysis because the approval date, due date, completion date, and benefit from the works may fall under different owners.

Approved and fully due before completion

It is commonly paid by the seller or deducted directly from the purchase price.

Approved before completion but payable in future installments

The allocation should be written expressly.

Proposed but not yet approved

Disclose the proposal and uncertainty.

Approved after the sale agreement but before completion

Apply the contract provisions dealing with changes and new disclosures.

Works completed but the invoice not yet issued

Use a reasonable estimate and a capped holdback.

Confirm:

• who adopted the decision;
• the date;
• quorum and voting requirements;
• the total project amount;
• the apartment’s share;
• payment dates;
• purpose;
• contractor documents;
• amounts already spent;
• refund possibilities;
• current disputes;
• whether later stages are expected.

Do not conceal a known future assessment merely because the formal invoice has not yet been issued.

Methods of allocating a special assessment

By approval date

The seller pays assessments approved before completion.

Advantage: simple.

Disadvantage: the buyer may receive most of the future benefit.

By payment due date

The owner on each installment date pays that installment.

Advantage: straightforward for accounting.

Disadvantage: the seller may avoid a known obligation arising from a pre-completion decision.

By period or economic benefit

The parties allocate the amount based on the timing of the works and who benefits.

Disadvantage: more complex and subjective.

By fixed negotiated amounts

Often the clearest method for a large known assessment.

Example:

The seller pays X; the buyer assumes future installments totaling Y.

Avoid vague language such as “all building charges will be prorated at completion” where an approved future assessment requires a specific rule.

Reserve funds

Clarify whether reserve-fund contributions are:

• attached to the unit and non-refundable;
• held as a personal credit for the owner;
• a refundable deposit;
• collective condominium property;
• an unpaid liability;
• an advance payment.

A seller should not automatically demand reimbursement from the buyer for historic contributions to a common reserve if the governing documents do not create an individual transferable balance.

A buyer should not be charged twice for the same contribution if it has already been credited to the unit.

Obtain management’s written explanation.

Prepaid service charges

If the seller has paid a year in advance, the parties may prorate the unused period.

Formula:

Seller credit = prepaid amount × buyer’s share of the remaining period

Example:

• annual service charge: USD 1,200;
• completion after four months;
• buyer receives the benefit of the remaining eight months.

Possible credit to the seller: USD 800.

This applies only if the building’s accounting and the sale agreement allow the benefit to pass with the unit. Management may instead refund the seller or retain the money as a unit-account credit.

Penalties

Review both the authority and the calculation.

Ask:

• the rate;
• whether the calculation is simple or compounded;
• any grace period;
• any cap;
• notice requirements;
• waiver practice;
• authority to impose the charge.

Where the principal arrears will be paid in full at completion, ask management to reduce or waive the penalties.

Obtain the concession in writing before sending the money.

Do not rely on an agent’s approximate figure.

Utilities and meter readings

A building clearance may not cover every personal utility account.

At handover, record:

• electricity;
• water;
• internet;
• gas, if any;
• utility deposits;
• outstanding amounts;
• common meters where relevant.

If the final bill will arrive later, retain only a reasonable, capped amount with a fixed release date.

Do not hold a large sum indefinitely for a small utility bill.

Where the apartment is tenanted

If the tenant has been paying service charges directly, review:

• the lease;
• receipts;
• any arrears;
• deductions from the tenant’s deposit;
• existing disputes.

The seller remains responsible to the buyer for presenting a clear position in the sale transaction. The seller must establish who actually owes the condominium.

Where the buyer takes over the existing tenancy, allocate:

• service-charge responsibility before and after completion;
• the tenant’s deposit;
• rent apportionment;
• prepaid sums.

Do not leave the tenant, seller, and buyer to argue about old invoices after title transfer.

Responsibility of a private property manager

The unit manager may have been contractually required to:

• collect rent;
• pay service charges;
• receive invoices;
• report arrears.

Request:

• the management agreement;
• financial statements;
• bank-transfer evidence;
• notices received;
• repair deductions.

If the manager failed to perform, the seller may have a separate claim. The sale should not remain dependent on that internal dispute where the unit account can be cleared and evidence preserved.

Never substitute a private manager’s statement for the condominium’s own account statement.

Where the developer still owns many units

Ask:

• whether the developer pays service charges on unsold units;
• whether it subsidizes common expenses;
• how it participates in votes;
• whether private owners are charged differently;
• whether management is affiliated with the developer.

A seller may challenge unequal treatment based on the project documents and legal advice, but should not publish unsupported accusations.

For the sale, the buyer needs the current unit statement and a realistic understanding of the building’s financial sustainability.

Mortgage debt and condominium arrears

A possible distribution sequence is:

1. Taxes and transaction costs.
2. Condominium arrears.
3. Loan payoff.
4. Holdbacks.
5. Balance to the seller.

The lender may require a different priority.

Calculate whether the purchase price is sufficient to cover everything.

Seller shortfall = mandatory payoffs and costs − available purchase funds

If the result is negative for the seller, the seller must fund the shortfall before or at completion.

Do not assume the bank will release its security before the condominium account is paid, or vice versa. The two processes must be coordinated.

Include arrears in the seller’s net-proceeds calculation

Account for:

• regular arrears;
• penalties;
• special assessments;
• utilities;
• parking charges;
• direct payments to management;
• holdbacks;
• legal costs related to the dispute.

Example:

• sale price: USD 120,000;
• service-charge arrears: USD 3,200;
• negotiated penalties: USD 400;
• seller’s share of special assessment: USD 2,000;
• utility holdback: USD 300.

Building-related deductions: USD 5,900.

The seller should know this amount before rejecting a lower but cleaner offer.

Disclosure to the buyer

Disclose:

• the amount;
• the type of charge;
• whether it is disputed;
• the payment plan;
• how it will be handled at completion;
• special-assessment notices;
• the management contact;
• supporting documents.

Do not wait until the buyer has already spent money on legal due diligence.

A disclosed and solvable debt usually damages trust less than a small hidden one.

Record the disclosure in an annex to the reservation agreement, preliminary agreement, or sale and purchase agreement.

What the sale agreement should cover

Define:

• seller responsibility up to a stated date;
• buyer responsibility after that date;
• known arrears;
• special-assessment allocation;
• direct payment;
• holdback arrangements;
• management clearance;
• utility reconciliation;
• treatment of overpayments;
• seller representations;
• unknown pre-completion charges;
• dispute procedure;
• completion statement.

Avoid an unlimited representation such as:

The seller guarantees that no building charge will ever arise.

A more precise clause can address:

• the period before completion;
• known notices;
• liabilities caused by the seller’s actions;
• claims attributable to prior periods.

The buyer needs protection, while the seller needs defined limits.

Condition precedent or completion obligation?

Condition precedent

Completion does not occur until the clearance letter is issued.

This strongly protects the buyer but may cause delay.

Simultaneous direct payment

The debt is paid at the same time as the purchase price.

Suitable where the amount is exact.

Post-completion obligation backed by a holdback

Used where the final account is delayed.

Choose the method according to the size of the balance and management’s ability to cooperate.

Do not leave a substantial debt secured only by an unsecured promise from a seller who is leaving the country.

What the clearance letter should contain

Request:

• the building and management entity;
• the unit number;
• the owner’s name;
• the issue date;
• the date through which the account is paid;
• the categories of charge covered;
• a zero balance or stated exceptions;
• any future special assessment;
• refundable deposits or credits;
• the signatory’s name and position;
• contact details for verification.

A sentence saying “maintenance is paid” may not cover utilities or a special assessment.

Attach the detailed account statement.

Independent verification by the buyer

The buyer’s lawyer should contact management using an independently verified official channel, not only the number supplied by the agent.

Verify:

• authenticity of the letter;
• authority of the signatory;
• final amount;
• move-in and new-owner registration procedures;
• known assessment resolutions.

The seller should authorize disclosure of the necessary account information.

Management may properly limit private data; written owner consent can resolve much of that issue.

If management refuses to issue clearance

First identify why:

• unpaid balance;
• dispute;
• no standard form;
• conflict with the developer;
• uncertainty about the owner’s identity;
• pending assessment;
• internal approval delay;
• an additional fee.

Possible substitute evidence includes:

• a detailed account statement;
• receipts;
• a lawyer’s undertaking;
• direct payment;
• a holdback;
• confirmation by official email;
• informed buyer waiver after legal advice.

If management refuses to provide any written information at all, that operational risk should be disclosed and reflected in the transaction structure and price.

Never fabricate a clearance letter.

If the assessment amount is not yet known

Use a capped holdback.

Example:

• expected assessment: USD 3,000–5,000;
• holdback: USD 6,000;
• funds released when the final resolution is issued by a specified date;
• seller pays the valid pre-completion share;
• excess returned to the seller;
• if no resolution is adopted by the long-stop date, a pre-agreed fallback applies.

Specify who may authorize payment from the retained funds.

Do not allow management to claim an unlimited amount without documents.

Transferring the debt to the buyer

A buyer may agree to assume the balance in exchange for a price reduction.

Required protections include:

• management’s acceptance of the payment arrangement;
• exact amount;
• clear penalties;
• no unexpected acceleration of the full balance;
• an equivalent buyer credit;
• no title-transfer obstacle;
• seller release.

The price reduction should reflect both the amount owed and the risk assumed.

The seller should not remain liable after completion without realizing it.

Obtain a written release where possible.

Negotiating with management

Prepare:

• a proposal for full payment;
• the anticipated completion date;
• evidence of the direct-payment structure;
• a request to reduce penalties;
• payment history;
• evidence supporting the dispute;
• the buyer’s clearance requirements.

Management may agree to:

• waive part of the penalties;
• accept installments;
• issue clearance upon direct payment;
• provide interim confirmation;
• ring-fence the disputed amount.

Avoid unsupported threats. From management’s perspective, completion often creates the best opportunity to recover the arrears.

Transaction timeline

Before marketing

• request the account statement;
• identify every category of charge;
• calculate seller net proceeds;
• isolate disputes.

Before accepting an offer

• disclose the balance and payment method;
• confirm the buyer is comfortable with the structure;
• prepare the relevant reservation or preliminary-agreement terms.

During due diligence

• provide rules, resolutions, and receipts;
• negotiate with management;
• update the payoff figure.

Before completion

• obtain the final statement;
• sign direct-payment instructions;
• establish any holdback;
• agree the clearance-letter wording.

After completion

• release the unused holdback;
• close utility accounts;
• retain all receipts;
• continue any separate dispute if rights were preserved.

Warning signs

• the seller denies a known debt;
• there is no itemized statement;
• payment is requested to an employee’s personal account;
• transfers to the former manager cannot be traced;
• a special-assessment notice is concealed;
• the clearance letter is outdated;
• the charge is based on the wrong area;
• penalties are unexplained;
• the buyer is asked to assume debt without a credit;
• an agent says the debt is irrelevant because title can still be registered;
• mortgage payoff and arrears exceed the purchase price;
• the tenant’s deposit is confused with a building deposit;
• a holdback has no end date;
• direct payment is not credited against the price;
• prepaid service charges are ignored;
• management refuses to issue a receipt;
• the sale agreement says nothing about an assessment approved before completion.

The main principle

Service-charge arrears or a special assessment should not remain an undefined threat hanging over the transaction.

Turn the issue into a controlled settlement process:

1. Identify every charge and every recipient.
2. Verify the legal basis, unit area, and arithmetic.
3. Pay the undisputed portion.
4. Isolate the genuine dispute.
5. Allocate the special assessment explicitly.
6. Use direct payment or a capped holdback where necessary.
7. Obtain a receipt and dated clearance letter.
8. Reflect everything in the seller’s net proceeds and the sale agreement.

A buyer may accept a unit with a disclosed and manageable liability. Buyers are far more likely to walk away when the amount is hidden, unlimited, or nobody controls the settlement process.

This article is for general information only and does not replace individual advice on Cambodian law, cadastral registration, tax, accounting, or co-owned-building management. Title-transfer requirements, the validity of charges, and clearance procedures must be checked for the specific building and transaction.

Sources

1. Royal Government of Cambodia — Sub-Decree No. 126 on the management and use of co-owned buildings, including private units, common property, internal rules, and management. Checked 19 July 2026.
2. Kingdom of Cambodia — Civil Code provisions relating to co-ownership, sale, seller obligations, payment, mandate, and leasing. English translation supported by the Japan International Cooperation Agency. Checked 19 July 2026.
3. Ministry of Land Management, Urban Planning and Construction — official cadastral services and 2026 public-service procedures; exact title-transfer requirements must be confirmed with the competent authority. Checked 19 July 2026.
4. General Department of Taxation — Prakas No. 577 on stamp duty for property transfers and current real-estate transfer procedures. Checked 19 July 2026.
5. Cambodian law granting foreigners ownership rights in private units of co-owned buildings. Checked 19 July 2026.

Frequently asked

Can an apartment be sold if service charges are unpaid?

In some transactions, the arrears can be cleared before completion, paid directly from the purchase price, or covered by an agreed holdback. The title-transfer requirements and the building’s internal clearance procedure must be checked for the specific property and competent authority.

Who pays a special assessment—the seller or the buyer?

There is no universal answer. The sale agreement should address the approval date, due date, disclosure, who benefits from the work, and the completion date. Uncertainty is best resolved through an explicit allocation or a limited holdback.

What should a seller do if they dispute management charges?

Separate the undisputed amount, request an itemized calculation, document the objection and supporting evidence, and agree on payment under reservation, a holdback, or another dispute mechanism without allowing the entire sale to remain blocked.

Is a verbal assurance from the building manager that nothing is owed sufficient?

No. Obtain a dated written statement identifying the unit, owner, categories of charges, calculation date, authorized signatory, and treatment of utilities or assessments that have not yet been invoiced.